Ontario Struggles with High Natural Gas and Electricity Rates – Why It Matters

Affordable, predictable and stable hydro costs can help keep Ontario’s economy competitive, says the Canadian Federation of Independent Business (CFIB). For the past few years, the CFIB has lobbied the provincial government to address the core issues facing the energy sector and to better align energy policies with the realities of running a business in Ontario.

For example, the CFIB has urged the province to eliminate time-of-use rates for businesses and instead implement a lower cost rate system for the first 3,000 kilowatt hours of electricity consumed per month.

Smart Meters & Time of Use Prices

The CFIB says hydro costs became a bigger issue for businesses after smart meters were introduced in 2010, charging time-of-use prices. Unlike households, many businesses open during regular 9 to 5 hours and pay peak rates for electricity.

HST Rebate

Although some businesses in Ontario are eligible to receive an 8% HST rebate on their hydro bills, many business owners say although the rebate provides some relief, their electricity bills are still much too high.

Some business owners say that if the government continues to increase hydro rates, they will be forced to cut staff and working hours, reduce investment in their businesses, and slow down future hiring.

Seeking Solutions

“There are solutions available for business owners seeking to minimize the impact of higher

electricity and natural gas prices in Canada. For example, Active Business Services works with

owners to understand their business operation, energy requirements and financial targets.

Businesses will receive a comprehensive energy assessment, along with a recommended course

of action.

One of the first issues we consider is the type of commodity used, i.e., electricity or natural gas.

We provide customers with the ability to spread risk using various hedging strategies rather than absorb all the risk with a single supply arrangement.

For example, customers can manage their natural gas procurement by choosing our Managed

Natural Gas Program or our Flexible Pricing Options program, both focused on business in Canada.

Our Managed Natural Gas Program offers tools for every business to effectively manage risk

combined with diversified portfolio procurement strategies including fixed pricing on a monthly or annual basis.

We also offer a variable pricing solution, which caters to businesses in Canada who want to take

advantage of market conditions or are uncertain about their future natural gas needs.

Alternatively, we offer a blended hedging program, which combines variable and fixed rate

pricing.”

By the Numbers

As of 2015, it was estimated that 2,933 large commercial businesses with more than 500 employees were located in Canada. More than one-third were Ontario-based. While large commercial companies account for only 0.3% of the businesses in Canada, the sector employs 9.7% of Canada’s workplace, according to EnergyRates.ca.

While these titans of industry play an outsized role in shaping the economy of Canada, this influence comes at a cost: specifically, massive electricity and natural gas costs.

While hard numbers aren’t easy to find, given how commercial companies that would fall under the definition of “medium businesses” don’t draw nearly as much attention as small businesses and large companies, it’s believed that such businesses use between 30,000 and 65,000 kWh of electricity per year, though this may vary dramatically depending on the nature of the business.

And in many cases, the amount of natural gas in Canada consumed by small commercial companies can dwarf electricity consumption. This should make at least one thing clear: Even a modest improvement in energy efficiency can save a great deal of money.

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Active Business Services is an energy management firm that has dedicated the last ten years to providing Canadian commercial and industrial customers with natural gas and electricity supply and risk management solutions.